General Studies · Capital Asset Pricing Model
Which of the following statements relating to the Capital Asset Pricing Model (CAPM) is correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Investors in a company with high unsystematic risk will require a higher return according to CAPM
- 2A beta greater than 1 indicates a financial asset that has higher systematic risk than the market portfolio as a whole✓
- 3The Capital Asset Pricing Model considers both systematic risk and unsystematic risk to price an asset
- 4The beta of a share represents only business risk
Correct answer
A beta greater than 1 indicates a financial asset that has higher systematic risk than the market portfolio as a whole
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